Rep. Alexandria Ocasio-Cortez, D-N.Y., on Capitol Hill. (Photo: Andrew Harnik/AP)
Do we need billionaires? Ocasio-Cortez forces a conversation on the place of the superrich
(WARNING: THIS IS A LONG ASS ARTICLE, BUT THE MEAT IS IN OUR “SPOTLIGHT” BELOW. IF YOU LIKE TO READ LIKE WE DO, THEN READ ON ;))
From the annual gathering of the elites in Davos, Switzerland, to the talk show sets of New York City, a new conversation is taking place about the role of the superrich in America, and Rep. Alexandria Ocasio-Cortez, D-N.Y., is largely responsible.
(It also required commentators to clear up misunderstandings about what she was proposing. Only income in excess of $10 million would be taxed at 70 percent; lesser rates would apply to the first $10 million. Currently, the top marginal federal income tax rate is 37 percent, but the very wealthy usually manage to get much of their income treated as capital gains, which are taxed at either 15 or 20 percent.)
The wealthy have noticed, and they don’t care for the idea. Scott Minerd, global chief investment officer for $265 billion Guggenheim Partners, told CNBC the proposal was “scary” and worried that it might gain traction among legislators.
“By the time we get to the presidential election, this is going to gain more momentum,” said Minerd, who added that he would probably be personally affected by it. “I think the likelihood that a 70 percent tax rate, or something like that, becomes policy is actually very real.”
“No, I am not supportive of that, and I don’t think it would help the growth of the U.S. economy,” said billionaire CEO Michael Dell of the proposal. Estimates on how much additional revenue the Ocasio-Cortez tax hike would raise vary because it’s assumed the wealthy would work to find ways around it, but economists have suggested between $291 billion and $720 billion over a 10-year period.
Scott Minerd, chairman of investments and global chief investment officer of Guggenheim Partners. (Photo: Patrick T. Fallon/Bloomberg via Getty Images
Ocasio-Cortez’s staffers are weighing in. Dan Riffle, her policy director, wrote on Twitter earlier this week, “My goal for this year is to get a moderator to ask ‘Is it morally appropriate for anyone to be a billionaire?’ at one of the Dem primary debates.” (Riffle has changed his Twitter display name to “Every Billionaire Is a Policy Failure.”) Ocasio-Cortez was asked that question on Monday at an event honoring Martin Luther King Jr. and responded that she thought it was immoral that billionaires could co-exist in a country where poor children are still being infected by hookworm.
A few hours after answering the question on the morality of billionaires, Ocasio-Cortez was discussing raising the marginal tax rate on The Late Show With Stephen Colbert. It was a casual conversation on network television in which the congresswoman addressed massive income inequality and talked about her status as a Democratic Socialist.
Ocasio-Cortez was born in the Bronx but attended a high school in an affluent Westchester County suburb, an experience that has informed her views. “Contrary to former New York City Mayor Michael Bloomberg’s contention that an influx of billionaires would be ‘a godsend,’ Ocasio-Cortez sees downsides of such extraordinary wealth,” the website City & State tartly observed.
“At what level are we really just living in excess?” said Ocasio-Cortez. “And what kind of society do we want to live in? And do we want to live in a city where billionaires have their own personal Uber helipads when people are working 80-hour weeks and can’t feed their kids?”
And the friendly Colbert set is not the only place where Ocasio-Cortez’s ideas are being discussed. Fox News host Sean Hannity spent part of his Wednesday evening broadcast replaying her comments on wealth inequality and attacking Riffle’s comments on billionaires. After Ocasio-Cortez posted an image of Hannity’s broadcast to Twitter with the comment: “Tempted to frame this and put it on my desk.” After a commercial break, Hannity interpreted this to mean the congresswoman was watching his show and welcomed her before offering to come to D.C. to sign the screen grab and talk about the issue with her for an hour. It was not the first time Hannity has publicized Ocasio-Cortez’s agenda.
The congresswoman has accomplished two things in recent weeks: She’s managed to penetrate the media cycle generally dominated by President Trump with policy ideas and shifted the Overton Window — a term for the range of ideas that are at any given time considered worthy of public discussion — to the left on issues from tax rates to climate change policy.
“The Democratic Party has become calcified and inward-looking, misleading its supporters so it can sustain the approval of billionaires and bankers,” suggested progressive writer Matthew Stoller in a recent Washington Post op-ed. “Ocasio-Cortez is grabbing attention because she is young and cool, yes, but also because she is grappling with genuine questions of economic and political power. She has demonstrated that there is a hunger for a more open and populist kind of politics. That’s also why she is uniquely jarring to insiders. She has fused a cogent political and ideological critique with theatricality. It’s important not to make premature conclusions about where this is all leading, but Ocasio-Cortez is channeling public hunger for a genuine restructuring of our society’s power arrangements.”
Photo: Kathy Willens/AP
Anand Giridharadas, an author whose book “Winners Take All” serves as a critique of income inequality and elite philanthropy, has said that Ocasio-Cortez’s stances have changed the Democratic Party in her brief time in Congress.
“She has managed to explain to the American public concepts like marginal tax rates that I’m not sure anybody has tried to explain in my lifetime watching politics,” said Giridharadas in an interview this week. “And she’s used Instagram and Twitter to do it and you want to laugh at her as many people do, she’s changing poll numbers on an issue like that.”
The conversations about addressing inequality come amid the government shutdown, which has resulted in daily reminders of the difficulties facing many Americans as federal employees are set to miss their second paycheck. A May 2018 Federal Reserve report stated that 4 out of every 10 Americans could not cover $400 in emergency expenses without taking on debt or selling something, and the paycheck-to-paycheck living has been seen with long lines for food banks and stories like the one of a federal employee pawning her wedding ring to cover bills.
A 2017 study found that the richest 1 percent of Americans held 40 percent of the nation’s wealth, while the top 20 percent hold 90 percent of the nation’s wealth.
Article source: Yahoo News
ALTHOUGH NOBLE, THERE’S ONE ISSUE WITH THIS WEALTH TAX IDEA…
The rich have a few tricks to avoid Democrats’ tax plans
If Democrats want the wealthy to pay more into the U.S. Treasury, they’ll need to contend with one fact: The rich are very good at dodging taxes.
The top 0.1 percent (AKA..YOU) have become expert in shifting and re-labeling their income in response to tax incentives. That skill is why some on the left are proposing blunter tools to tackle inequality. Massachusetts Senator Elizabeth Warren, who’s exploring a run for president, is proposing a wealth tax, a 2 percent annual levy on fortunes of more than $50 million and a 3 percent tax on the assets of billionaires.
Others, including Representative Alexandria Ocasio-Cortez from New York, have suggested hiking income tax rates.
“There’s an element, yeah, where people are going to have to start paying their fair share,” Ocasio-Cortez told Anderson Cooper on “60 Minutes” on Jan. 6. “Once you get to the tippy tops, on your 10 millionth dollar, sometimes you see tax rates as high as 60 or 70 percent.”
But new research on the U.S.’s largest fortunes shows that simply raising marginal income tax rates may not move the needle on inequality. Any proposal aimed at the wealthy will need to compete against the clever and complicated techniques that rich Americans can deploy.
“The lesson is that the details are going to matter a lot,” said Eric Zwick, an associate professor at the University of Chicago Booth School of Business, who co-authored the study with three other economists, including the Treasury Department’s Matthew Smith. “You have to enforce the rules and keep track of people and how they’re changing the nature of their income in response to the rates.”
Picture a rich person and you may imagine a big company CEO or a professional athlete collecting $40-million pay packages year after year. But these examples are salaried employees. Business owners are far more common among the super-wealthy. And being your own boss brings huge clout, including flexibility to decide exactly how and when to pay taxes.
Business owners have options. They can set up corporations, which pay their own taxes and whose employees and investors then pay taxes on their salaries and dividends. Or, they can establish pass-through businesses. These pay just one layer of taxes on their owners’ returns.
The previous round of tax reform, in 1986, gave the wealthy larger incentives to use pass-through businesses, and they’ve become very popular: About 84 percent of the top 0.1 percent of America’s earners made some pass-through income, Zwick’s research found.
Among the top 0.1 percent, pass-through owners are far more common than well-paid execs. In 2014, there were 139,000 taxpayers with a combined pass-through income of $264 billion, the study finds. That’s eight times more income than collected by the top 10,700 executives in an S&P index.
Owners and entrepreneurs also have freedom in how much salary they pay themselves. By minimizing their salaries – and boosting profits – the wealthy can save a couple of percentage points in payroll taxes. That’s what the rich have been doing since 2001, the paper says, “paying themselves less in wages and more in profits.”
Zwick and his colleagues conclude most rich owners are actively involved in their businesses, no matter what their tax forms say.
“Most top earners are working rich,” the study says. “They derive their income from human capital, not physical or financial capital.”
Typical pass-through businesses of America’s 0.1 percent are smaller regional businesses like car dealers, beverage distributors, or large law firms. And the last couple of decades have been good to these owners. Profits are up, along with the productivity of employees. But owners were able to grab most of these gains for themselves, rather than handing them to staff in the form of higher salaries.
The top 0.1 percent owner’s share of productivity gains rose from 40 percent in 2001 to 52 percent in 2014, the study finds. “As labor productivity grows, owner-managers appear to capture an increasing share.”
Business owners also have more ability to cheat on taxes than employees. While every dollar earned on a W-2 or 1099 form is automatically reported to the Internal Revenue Service, a private business can find ways to hide money or artificially lower profits.
Pass-through businesses put a big dent in the country’s tax gap — taxes that should have been paid but weren’t. According to the Brookings Institution, more than 40 percent of the gap from 2008 to 2010 — or $190 billion — was a result of pass-through businesses underreporting income for tax reasons. Even if business owners follow the law, they can finagle themselves tax-free prizes like lavish travel budgets and company-owned cars and jets.
The latest round of tax reform, signed into law by President Trump a year ago, delivered a fresh perk for many business owners.
The new pass-through break, valued by the nonpartisan Joint Committee on Taxation at $415 billion over a decade, creates a 20 percent tax break for owners who qualify. Well paid lawyers, doctors, accountants, investment bankers and other “service” businesses are barred from the break, but others can slash their top marginal rate to less than 30 percent, from 37 percent under current law and 39.6 percent pre-tax reform.
The law also gave a break to corporations, reducing their rate from 35 percent to 21 percent, and kept in place provisions that levied higher rates on wages than on capital gains and most corporate dividends. A salaried CEO pays a marginal tax rate of 37 percent, while a shareholder collecting dividends or a stock gain pays at most a federal rate of 23.8 percent.
Inequality and taxes are certain to be key issues among Democrats seeking to challenge Trump for the White House. Senator Kamala Harris of California, who announced her 2020 presidential run this week, proposed in October paying middle-class and working families a refundable tax credit of as much as $6,000 a year. Senate Democrats have also proposed repealing major parts of Trump’s tax overhaul.
To the Trump administration and conservative economists, lower taxes on investors and owners encourage investment and entrepreneurship. For those demanding higher taxes on the wealthy, however, levying so many different rates on various forms of income is a problem. By merely raising the marginal rate on wages or pass-through businesses, for example, you could end up pushing more income back into corporate structures, warns University of California Berkeley professor Emmanuel Saez, one of the economists who helped Warren develop her wealth tax proposal.
The latest research “shows that the distinction [between] capital versus labor income is overblown,” Saez said. “Hence it is critical to align tax rates on different forms of income to limit tax avoidance opportunities.”
Article source: Bloomberg.com
There’s this issue with how uneducated a large percentage of most USAers (FROM BOTH SIDES) are when it comes to taxes, income, what wealth REALLY is, and the mentalities behind the wealth gap and inequality. So like we famously do here at the RockerFairley, we’re just going to breakdown each category based on numbers, how the government DOES REAL BUSINESS behind the public, and the universal thought patterns that put certain individuals in a position of wealth and abundance based on the laws of attraction. Then, we’re going to present a possible SOLUTION that you could adapt and plug into regardless of your political beliefs and philosophies.
Wealth itself has absolutely NOTHING, and we mean NOTHING….to do with money, income, property, or anything tangible that you can physically see and touch. Riches? Yes, absolutely. But wealth on the other hand is a whole different animal. Wealth is like putting two words together; wellness and health. These two things are an individual pursuit that YOU and I might have for ourselves, but that doesn’t mean EVERYONE in our neighborhood, family, circle of friends, coworkers, have any ambition in.
Therefore, because you and I have this desire to take care of ourselves mind, body and soul, and invest our efforts in learning about ourselves, meditating (that most consider pagan or weird), or other activities that help our health and well-being, we ATTRACT circumstances and opportunities of abundance, more life activities, and spiritually nourishing relationships where more income, money, higher quality of living and certain immaculate lifestyles just so happen to be, NOT the number one agenda or goal, but a simple BYPRODUCT of taking care of our mind, body and soul. That is TRUE wealth.
Unfortunately, most are too busy pointing fingers at materialism THEY wish they had (otherwise it wouldn’t be their main objective on why they want to raise taxes on the group of incomes they wish they had), instead of asking questions on what wealth really is. Therefore, politics like this is their ideal product to be distracted by.
Now on to certain taxes.
INCOME TAXES 99er Edition = a penalty that the public choose to pay on their income and use as a class warfare weapon against each other.
INCOME TAXES 1%er EDITION = A fee the wealthy CHOOSE to invests in to leverage benefits from the tax code that help other wealthy elites.
There are THREE types of income in the USA: earned, passive, portfolio.
Earned = money generated from labor and wages.
Passive = money generated from real estate/rent/leases
Portfolio = money generated from stocks, bonds, royalties
Earned income is mostly derived from mentalities that believe there’s only one kind of income and usually have one type of life goal given to them from school; get a good job. This mentality usually believes starting a business or investing in stocks is risky, therefore avoid advancing their knowledge on how to start one. Therefore, they pay more in taxes due to failure of using options presented to them throughout life. They are willing to pay taxes on their income without much fight or protest. They usually complain about taxes going up and paying someone else who depends on social programs of mooching off of their hard work without evidence. This type of tax is the least needed, but is usually the most lucrative to politicians, which encourage politicians to continue the class warfare due to its profitability.
Passive income is derived from real estate INVESTING….not flipping. There IS a big difference according to Section (1031) of the Internal Revenue Code. Most sophisticated and business savvy real estate investors use this method to defer their capital gains taxes by using profits from a sold property to acquire or buy a bigger property. This give investors another edge on legally alleviating their taxes for years to come. Otherwise, capital gains taxes, although taxed a little lower than earned, is levied on the flipper after the sale of the property.
Portfolio income is dividend payments and profits from stock holdings and shares of a corporation. We’re actually exploring a question if there are other “1031 tax deferred exchange-type” loopholes within the 37k page tax code that gives shareholders similar tax benefits as real estate investors, but with stocks. If you know any, and can LEGALLY share on here, please mention it in the comments below.
Mostly the one percent of American society knows about the other two, they asked for the information and it was given. Therefore, with KNOWLEDGE, they gained the power to exercise this knowledge, and use it to benefit their individual income goals and agenda.
Unlike most in the masses, those who use the tax code to their benefits HAD and currently have VISION of what they want, and how to attract the STATE OF MIND to attract that particular lifestyle and income. How ironic that when we hear growing up “do not let anyone kill your dreams and goals, and be what you put your mind up to be”, but somehow we were led to believe that same mindsets elected politicians to TAX these same goals and dreams. So the next time you hear someone tell you to go after your dreams, ask them how much do they want that dream to be taxed.
And it’s all about the mindset. Majority of people who go to the polls and vote for politicians vote because they have some kind of an economic chip on their shoulders. They’re never there to reinforce their stand on the Constitution, it’s usually because the rich is getting away with this, or the wealthy is getting away with that, or the illegal immigrant takes away from the fruits of the labor of American born or legals, it’s a war zone every election. But it starts with the public. So our question is; who created this monster of a tax code? Ask those who go to the polls every election.
Now in my own personal opinion, I look at America as a business instead of a government and ask; ‘where does the United States generate THE MAJORITY of its tax revenue from?‘. And what I found out wasn’t really surprising due to how much marketing and advertising this country produces. The government WANTS US AS A COLLECTIVE TO CONSUME. There’s a reason for this. The majority of the United States GDP derives from consumption related taxes and tariffs. It’s not only insane to depend solely on labor and wage related taxes to sustain any government, but it’s completely inconsistent and asinine based on human nature to cheat and lie in order to sustain and increase their own personal self interest and their families. And the funny part? Your state AND federal government knows this. In other words; no matter how much you and I claim to be so “patriotic”, there’s a good chance you will NEVER exchange the quality of life of yourself and family to take care of the very politicians you may want to “kick out of Washington” every time they do something you don’t like. So why would government depend on your honesty of how much you made last year when they can simple make one penny out of every transaction you VOLUNTARILY make online or at the store? You tell me which is more sustainable and profitable?
Our solution to this whole “taxation game” is none other than this one. It’s by far THE BEST explanation, and better researched legislation that came across our radar. We’ve heard dozens of complaints about the tax code, we’ve heard some pundits demonize ANY proposals of replacing the tax code ranging from the VAT to a flat tax WITHOUT presenting THEIR suggestions. So we like how this organization brought to the table a more fairer option WE believe all Americans from various income brackets and political views can agree on.
In my line of business, we research our products, develop it, and sell it. Customers like it. They buy it. We make profit. We decide what to do with it. Pay our staff, pay ourselves (we are employees too), and reinvest in research and development. Our business expand, our staff incomes increase, our income increase. This is doing business. However we are aware that the public heard different, and without any proof, evidence, or hearing the other side of the story, they get angry, and point the political barrel of a gun on the very hands that feeds them. Therefore, they hear a politician (who by the way make their money off of EARNED INCOME as well as other investments) tell them how greedy we are. What they simply did was tell the public to add MORE pages to the tax code so that we one percenters have more pocket change to play with. In other words; they are taking “the power to tax is the power to destroy” to a whole new industry all by itself….and business is booming.
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Like “Larry the Liquidator” famously said in the hit movie “Other People’s Money”……”you can make all the laws and increase the taxes to 100 percent all you want, I don’t go away, I ADAPT”.
Learn how to NO LONGER take politicians, political talking points and taxes personal anymore, and learn the game like a one percenter. Subscribe NOW